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SCMP Reporter

The grand motto of the Rolls-Royce Enthusiasts' Club: Quidvis recte factum quamvis humile praeclarum, is looking particularly poignant this week.

 Translated as 'whatever is rightly done, however humble, is noble', it will offer some consolation to the disappointed Rolls-Royce Acquisition Consortium who saw their bold bid to take over the company quashed on Monday by an offer from German car giant BMW.

 Outwardly, the consortium is still defiant: 'We bid over GBP300 million [about HK$3.9 billion]. We will top it above BMW's bid,' Donald Longmore, secretary of the group, said.

 But few hold out much hope that the decision by British engineering group Vickers to plump for BMW's GBP340 million bid will be reversed.

 'I would be surprised if anyone came along now with not only the money, but also the credentials to buy Rolls-Royce,' Henderson Crosthwaite analyst Colin Line said.

 The fact Vickers decided that even the highly successful German car manufacturer Volkswagen, which had also bid for the company, was not the right group to take control of Rolls was indicative of how much better BMW's offer was, analysts said.

 Indeed, it is fast becoming clear that, even if a new bid were to emerge, it would probably prove unwelcome.

 Rolls-Royce's management as well as its blue-collar workers are familiar with the working practices of BMW, as the German firm supplies Rolls-Royce with eight- and 12-cylinder engines, as well as several other large components for its latest model, the Silver Seraph.

 In addition, rather than to slimming down Rolls-Royce operations, BMW looks poised to double the 2,600 workforce employed at the company's production line in Crewe, northwest England, with the aim of tripling annual sales of Rolls-Royce and sister model, the Bentley, to about 6,000.

 Analysts believe it is a good time to take over Rolls-Royce. Both British and worldwide sales have been increasing, and, with a new four-door Bentley to be launched later this year, a further expansion of sales is expected.

 Last year, sales reached 1,918 - about 10 per cent up on 1996 - and BMW is expected to pump in a further GBP1 billion over the next 10 years to quicken the pace at which new models are brought into the market.

 'We are delighted with the news and can now look forward to the future with even greater confidence,' Rolls-Royce Motor Cars chief executive Graham Morris said.

 'They [BMW] are intelligent people. Nobody invests GBP340 million and messes with what they are dealing with. A Rolls-Royce will always be a Rolls-Royce.'  Steve Taylor, who works as a convener for the Amalgamated Engineering Union, which has about 1,000 members at the Rolls-Royce Crewe plant, is similarly optimistic.

 'We needed long-term investment, and it looks like we got it,' he said.

 'People greeted the news well this morning and are brushing up on their German.'  Part of the reason behind the relaxed view of BMW's takeover is also due to the German company's past record.

 In 1994 it bought up the last of the mass-production British car manufacturers, Rover.

 Despite some initial fears the German company would slowly asset-strip the Rover group, BMW has since the acquisition invested over GBP3 billion and has increased the number of employees at its British plant.

 BMW believes it can also generate extra sales at Rolls-Royce, while boosting its profit margins by introducing cost savings worth about 30 per cent.

 The company plans to turn over new models much more quickly, generating larger volumes, so as to warrant research and development costs, as well as the build-up of the company's marketing infrastructure.

 Where Rolls-Royce is likely to benefit in particular will be in its access to BMW's much larger service and distribution network, in a move that will exploit much more fully the world-famous brand name that Rolls-Royce embodies.

 The move will also put pressure on competitors to come up with their own luxury cars.

 There is already significant synergy in the group, with BMW now predicted to base future Rolls-Royce cars on existing BMW platforms, such as the 7-series.

 Germany's Daimler-Benz is already considering whether to launch its own limousine model, and Volkswagen is making clear that it, too, wants to enter the market.

 News of Monday's deal prompted German Finance Minister Theo Waigel to publicly congratulate BMW for what he said showed 'the high international standing that Bavarian technology enjoys throughout the world'.

 In Britain, there are some murmurings over the loss of the last well-known British car company, but even the right-wing, and often nationalist, Daily Telegraph newspaper has found it hard to criticise a takeover that looks so clearly advantageous to Rolls-Royce.

 Instead, the paper cautions that 'we should be worried when this sentimentality [over the loss of Rolls-Royce] blends with fears about British sovereignty into a stew of anti-German prejudice.'  It said that not only was Germany an important ally, but it was also Britain's second-largest trading partner.

 'Germans also know a thing or two about making cars. If they want to exercise their skills here, we should embrace them wholeheartedly,' the daily said.

 Perhaps the disappointed Rolls-Royce fans can draw some consolation from that.



BMW given red-carpet welcome at Rolls-Royce